TECHNOLOGY AND THE SURGE IN MANUFACTURING SECTOR

Posted by : Gunjan Singh, Head of Technical Department 

Industrial communication technology is expected to continue to hold the largest share of the market during the forecast period. Industrial communication is a combination of components, software, and standard protocols that allows man-to-machine and machine-to-machine communication across various industries. Efficient, reliable, and secure industrial communications help in improving operational efficiency and reducing the overall operational costs of organizations. Industrial communication plays a significant role in industries such as oil & gas, electronics, automotive, and energy & power.

Manufacturing is no longer simply about making physical products. With customers demanding personalization and customization, the line between consumer and creator continues to become blur. Added sensors and connectivity turn “dumb” products into “smart” ones, while products increasingly become platforms—and even move into the realm of services. Changes in the manufacturing industry have become proportional to consumer demand. Consumers, these days want things faster and better, personalized and unique, and newer than last year or even last quarter. Therefore, it has become significant for the manufacturers to find a way to keep up not only with the changing demand for products but also with finding skilled workers to make these products.

The product choice has shifted to those that are intelligent, responsive and connected, i.e., "smart." Terms such as "smart lighting," "connected cars" and "wearable technology" are examples of these products. Consumers use this type of technology to track a variety of aspects in their daily lives, from what they eat to how much they exercise.

The evolution of “smart” products presents manufacturers with challenges on multiple levels. Some of these products incorporate complex software or interact with users’ smart devices, while others use cutting-edge materials that continually adapt to users’ changing needs. Further, not all products will be smart in the same way and, as smart products become more complex, it will be increasingly difficult for any single manufacturer to develop an entire hardware/software stack in house.

Modern computers continue to become exponentially smaller, faster, and cheaper. And as more and more technologies become digitally empowered, this pattern of growth has expanded beyond microprocessors. Emerging fields with potential for exponential growth include additive manufacturing, robotics, and materials science. The convergence of these and other technologies has the potential to generate huge improvements in capability, utility, and accessibility.

With the exponential advances in technology, barriers to entry, commercialization, and learning have begun to erode. New market entrants with access to new tools can now operate at much smaller scale, enabling them to create offerings once the sole province of major incumbents. While large-scale production will always dominate some segments of the value chain, innovative manufacturing models—distributed small-scale local manufacturing, loosely coupled manufacturing ecosystems, and agile manufacturing are arising to take advantage of these new opportunities.

This transition has made it more difficult to create value in traditional ways. Consequently, as the products become less objects of value and more the means for accessing information and experiences, creating and capturing value has moved from delivering physical objects to enabling that access.

As these trends play out in a growing number of manufacturing sectors, large incumbents should focus more tightly on roles likely to lead to concentration and consolidation, while avoiding those prone to fragmentation. The good news is that three roles driven by significant economies of scale and scope—infrastructure providers, aggregation platforms, and agent businesses—offer incumbents a solid foundation for growth and profitability. Due to competitive pressures, large manufacturers may experience increasing pressure to focus on just one role, shedding aspects of the business that might distract from the company becoming world class in its chosen role. The likely result is a significant restructuring of existing product manufacturers.

Finally, given the emergence of more complex ecosystems of fragmented and concentrated players across a growing array of manufacturing value chains, businesses that understand emerging “influence points” will have a significant strategic advantage. As the manufacturing landscape evolves and competitive pressure mounts, driven by the needs of ever more demanding customers, position will matter more than ever.

In the nutshell, decisions about where and how to play in this new environment, there is no master playbook—and no single path to success. But by understanding these shifts, roles, and influence points, both incumbents and new entrants can give themselves the tools to successfully navigate the new landscape of manufacturing.